Russia’s budget surplus disappeared over the summer, according to data released this week by the Russian Finance Ministry. At the end of June, the surplus was 1.37 trillion rubles ($23 billion); it fell to 137 billion ($2.3 billion) at the end of August.
Revenues are under pressure. Oil has traditionally been a larger component of Russia’s budget than natural gas, and prices for Brent crude — Europe’s benchmark — have fallen about 25% since peaking in early June.
Spending has also risen sharply, both on the military and on measures to protect the economy from the impact of Western sanctions, according to Janis Kluge, senior fellow at the German Institute for International and Security Affairs.
Real-time data from the Russian government shows the budget is in deficit, adding that the Kremlin’s financial hole could get much wider as military spending rises.
“Military spending was projected to be 3.5 trillion rubles this year, but that level was probably exceeded already in September,” Kluge said in emailed comments to CNN.
Russian business daily Vedomosti reported on Wednesday, citing sources close to the government, that the finance ministry had told government agencies to cut spending by 10% in 2023. Defense spending, however, would increase, a source close to Vedomosti mentioned. As the Ministry of Defense said.